Beyond Foreclosure: The Future of Suburban Housing: Places: Design ObserverAll of which is to say that entire neighborhoods are frozen in a state of functional deficiency by restrictive municipal zoning and especially by what are known in real estate law as the "covenants, conditions, and restrictions" that govern new residential developments. Builder-developers establish CC&Rs to reassure prospective homebuyers that their investments will be safe. Once the neighborhood is occupied, the developer establishes a homeowner association, which then administers and enforces the CC&Rs; as millions of Americans know well, it's not uncommon for HOAs to restrict the choice of exterior paint colors, prohibit boats or RVs from parking in driveways, ban outdoor clotheslines, limit structural modifications, forbid modes of occupation (like rentals or granny flats), etc. In recent decades the number of common-interest developments governed by HOAs has increased exponentially, from fewer than 500 in 1964 to more than 300,000 today, encompassing an estimated 24.8 million housing units and 62 million residents (20 percent of the population). CC&Rs provide the legal basis by which homeowner associations can levy fines and place liens on homes in violation. Thus property owners are guaranteed that the neighbors won't, for example, double the size of their house or rent out spare bedrooms or build an outhouse on the front lawn. It's a classic compact: you submit to restrictions on your own rights in exchange for stability and to protect your investment. [7]

But the foreclosure crisis has made it painfully clear that such culturally accepted and legally sanctioned resistance to change might be as much a liability as a benefit. We're at a pivotal moment, when thousands of neighborhoods will need to adapt in order to accommodate current realities and correct deficiencies in the housing market. -----------------------Read the whole thing. The link to this peer-reviewed article by Aron Chang came to me from editor Josh Wallaert. Very interesting observations on the suburban single-family home in general and on HOAs in particular. If you look to my previous post on the piece by Bob Bruegmann, you can see that there is a controversy in academia about the future of suburbia. HOAs and condos are a huge part of that future, which is something that Bob overlooks or at least never really acknowledges. I have discussed this issue with him, and his free-market orientation seems to place HOAs in at least as positive a light as cities, a view with which I strenuously disagree.

The Ambiguous Triumph of the “Urban Age” | Newgeography.com In fact, the much-ballyhooed urban majority might be in great part a statistical artifact, a way of counting the population that over-emphasizes the move from country to city and fails to account for the powerful counter-movement from the city back toward the countryside. Indeed the emerging reality of overlapping patterns of high density centers, lower-density peripheries and vast areas of very low density urban settlement, all of them interspersed with agricultural lands and protected open spaces, threatens to upend altogether the traditional notion of what it means to be urban. -----------------------My colleague Bob Bruegmann questions the "end of suburbia, triumph of the urban" line of thought.

Tuesday, September 13, 2011

Another Lesson on National Income Accounting for Robert Samuelson | Beat the PressSo, if neither investment nor consumption is the problem, then why isn't the economy bouncing back? This is where national income accounting would be very useful to Mr. Samuelson. The problem is that the country has a large trade deficit. It is close to 4.0 percent of GDP now, and would likely be in the 5-6 percent range if we were back at full employment. (Higher GDP increases imports, which would increase the size of the deficit.) This creates a huge shortfall in demand.

This shortfall was filled during the housing bubble years by a consumption boom and boom in residential construction and some categories of non-residential construction. With the loss of housing bubble wealth, there is no reason to expect consumption to return to its bubble levels. --------------------Interesting take on the situation from Dean Baker. He says increased deficit spending is the way forward.

Monday, September 12, 2011

Arthur Blaustein: California’s Folly — Prop. 13 - TruthdigI thought then, and am firmly convinced now, that the key elements in the proposition—the taxation formula and the two-thirds legislative requirement—would be responsible for causing a fiscal and social disaster. These two requirements have in time helped to lead the state into financial bankruptcy and created a dysfunctional state government. And the social consequences that I predicted then and which are all too apparent now are a race to the bottom in education (from K through our highly esteemed university system); public health; social services; public safety; arts, libraries and culture; and infrastructure development; as well as crippling the ability of local governments to provide basic amenities.-------------------I agree with Blaustein. Add to this the fact that common interest housing has proliferated in California and elsewhere as local governments struggled to find the revenues they lost with property tax caps. Double taxation: breakfast of champions.

I received an email recently expressing surprise that I didn't know about the United Nations' Agenda 21 plan to spread socialism around the world through mandating common interest housing for all. Indeed. This sort of thought pattern is instructive. I know about Agenda 21, which deals with sustainable development. The main focus of the "human settlements" recommendations is on the urban poor, about one billion of whom are living in slums--substandard housing, overcrowding, insecure tenure (they have no legal right to be where they are living), and lack of basic services (clean water, sanitation, electricity, transportation). Do the Agenda 21 people recommend giving them condo units, or otherwise enlisting them in common ownership schemes? No. The UN recommends expanding rental housing, not ownership. They think that focusing on ownership is a huge problem.
"A recent UN-Habitat report13 finds that national housing policies and donor supported
housing programmes are generally neglectful of the role that rental
housing can play as a form of affordable shelter for the poor. There is a heavy
emphasis in most policies on facilitating home ownership, despite the fact that many
families and individuals avail themselves of (or would choose to avail themselves
of) rental housing during some part of their life cycle." (Page 7)
I have contributed book chapters to two volumes on the international spread of common interest housing and so far I see no evidence that the UN favors it. If anybody has any evidence that the UN wants to expand condos and private gated communities all over the world, please send it along. All I can find in their reports is criticism of planning that continues to favor the affluent--the people who live in those private gated communities and condos outside the US.
On a larger scale, many right-wing and libertarian "property rights" critics of common interest housing don't get the basic picture. CIDs are a form of privatization. They appear where local government fiscal capacity is limited. To put it simply, if you don't like CIDs, quit complaining about paying your taxes and drop the anti-government rhetoric. You will have either public or private provision of basic services. The weaker your state and local governments are, the more they will require CIDs because they (government) can't afford to build or maintain infrastructure or hire the staff to provide services, or even enforce building codes. This is ultimately a self-defeating strategy for local governments, but it is the tax revolt mentality that started them down this road. And for all you right-wingers who don't like your HOA...as Shakespeare said, you are hoist with your own petard.